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Current events Consolidation Amelkis

Current events Consolidation Amelkis

05 avril 2018

The rate of tax society in France : next evolutions and impacts on consolidated financial statements

 

During the next 5 years (until 2022), the rate of tax to which will be submitted the profits of the French companies may change every year. The finance law promulgated at the end of the year on 2016 for 2017 was modified and amplified by the new government in its project put down to the Assembly on September 27th of this year, and aims at a rate of 25 % at horizon 2022.

Current situation: rates differentiated according to the size of companies

Looking forward to the vote of a new finance law by the end of year 2017, the calculations of tax system postponed in consolidation have to take into account evolutions of rate already acted.

Boards below presented evolutions having force of law until the adoption of the next finance law:

Societies which turnover is lower than 7,63 M€ :

Slice of taxable profit 2018 2019 2020 and beyond
0 to 38.120 € 15% 15% 15%
38.120 to 500.000 € 28% 28% 28%
Beyond to 500.000 € 33,1/3%

 

Societies which turnover is upper to 7,63 M€ and lower than 50 M€ :

Slice of taxable profit 2018 2019 2020 and beyond
0 to 38.120 € 28% 15% 15%
38.120 to 500.000 € 28% 28%
Beyond to 500.000 € 33,1/3%

 

Societies which turnover is upper to 50 M€ and lower than 1.000 M€ : 

Slice of taxable profit 2018 2019 2020 and beyond
0 to 500.000 € 28% 28% 28%
Beyond to 500.000 € 33,1/3%

 

Societies which turnover is upper to 1.000 M€ : 

Slice of taxable profit 2018 2019 2020 and beyond
0 to 500.000 € 28% 28% 28%
Beyond to 500.000 € 33,1/3%

 

  • Finance bill: acceleration of the decrease of the rates for all the companies

The bill deposited by the government on September 27th of this year to the Assembly simplifies the distinctions between sizes of companies but differentiate even more the rates according to years. Indeed, the proposed measures would be translated in the following way :

Societies which turnover is lower to 7,63 M€ :

Slice of taxable profit 2018 2019 2020 2021 2022 and beyond
0 to 38.120 € 15% 15% 15% 15% 15%
38.120 to 500.000 € 28% 28% 28% 26,5% 25%
> to 500.000 € 33,1/3% 31%

 

Societis which turnover is upper to 7,63 M€ :

Slice of taxable profit 2018 2019 2020 2021 2022 and beyond
0 to 500.000 € 28% 28% 28% 26,5% 25%
> to 500.000 € 33,1/3% 31%

 

  • How to apply these reforms in consolidated financial statements ?

In consolidated financial statements on December 31st, 2017, two difficulties must be resolved :

  • French companies with different tax rates.
  • Different tax rates according to years and thus the obligation to analyze the taxable bases in consolidated balance sheets according to their term to calculate the rate which is applicable to them.

Considering the method of calculation by slices until 2019, the tax rate of every company is not "obvious" anymore.

Indeed, if a company plans to realize 300 k€ of the fiscal profit in 2018, its rate will be 28 %, but if it plans rather to realize 800 k€ of the profit, are rates will be 30 %, etc.

The method of tax calculation by slices thus obliges companies to calculate an individual projected tax rate.

Besides, the [possible] decreases of rate over time require to examine tax bases according to their temporal term. So, a reserve IFC (Compensations of End of career) for example, will come loose in a distant enough term to see applying the most distant rate (25 % in the hypothesis of the adoption of the finance law such as proposed).

No attention private individual for companies having activated the fiscal deficits: generally speaking, the reduction in rates of taxes entrainera a decrease of IDA, with for counterparty a load of ID in result (as well according to CRC 99-02 Revised as according to IAS 12). This reduction will have to be completely noticed on December 31st, 2017 according to the future rates adopted in the finance law.

Besides, it will become necessary to échéancer the deficits according to their likely date of use, to apply the rate suited according to the likely year of use.

  • Implementation in a software of consolidation

In OPERA, just like in the other software at present on the market, every entity cannot see attributing(awarding) that a single code, and thus that a single value of rate of deferred tax.

In these conditions, during the next 5 years, it will be doubtless necessary to complete the automatic treatments of calculation of ID by manual writings of adjustment according to the maturity dates of the fiscal bases.
In OPERA, the creation of new codes of tax (for example: FRF2, FRF3, etc.) is made in the module Configuration / Tables / Other Rates.

Then, in the module Entities, modify the code of tax attributed to the concerned entities.

During the creation of the vintage year of table of rate of tax for the exercise 2017, the new codes of tax will appear (FRF2, FRF3, etc.) with a seizure opened in flow of opening (even if you indicated a table of rate of opening during the creation of the table 2017: indeed, these codes did not exist on the exercise of opening and the system does not thus propose value in flow of opening).

It is essential to seize for every new code of tax a value in flow of opening which is very equal to the value of the previous code (generally FRF). If it is not correctly made, the balance sheet of opening of the consolidation risks either to be unbalanced, or not to correspond to the closing balance of the previous exercise.

Marie-Laure Navelot - October 25th, 2017

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